Australian Ad Spend to Hit A$15.4 Billion in 2017 with Digital Driving Growth
- New ad spend growth forecasts show caution in 2017 but improved outlook for 2018
- Globally, mobile ad spend is set to overtake desktop in 2017, with digital forecast to overtake TV in 2018
- Innovation in digital advertising (video, social, programmatic) powers spend growth
Dentsu Aegis Network today publishes its Ad Spend Forecasts – June 2017. Based on data received from 59 markets across Asia-Pacific, the Americas, Europe, Middle East and Africa, Dentsu Aegis Network points to a more cautious economic outlook in 2017 than the previous year, with global ad spend growth falling from 4.8% to 3.8% (see Figure 1).
Australian ad spend growth holds at 4.1% amid cautious near-term outlook
Despite economic uncertainty and increased pressure on discretionary consumer spending, advertising spend in Australia is forecast to increase by 4.1% in 2017 to reach A$15.4billion (US$11.7billion).
Globally, in spite of concerns about the economic impact of Britain’s decision to leave the European Union, UK ad spend growth held up better than expected in 2016 at 6.1%. While there are signs of caution in 2017, with growth dipping to 4%, 2018 is forecast to see growth bounce back to 5.9%. A similar picture unfolds in the United States, where a slowdown to 3.6% is forecast for 2017, followed by a slight improvement in 2018 to 4.0%. The United States also remains the largest market in the world, accounting for 37.7% of global advertising spend in 2017. Advertising spend in emerging markets continues to outpace developed economies.
Mobile and digital become the new default settings
Forecasts also indicate how digital technology continues to disrupt and drive innovation in the way brands connect with their consumers. In Australia, digital is forecast to grow by 12% in 2017 and 11.3% in 2018. Already the number one media since 2014, it is forecast in 2017 to reach more than 50% share of total advertising spend for the first time.
Traditional media channels are expected to see continued revenue declines in 2017 and 2018. TV spend is forecast to decline by 2.6% in 2017 and 2.4% in 2018. Furthermore, reflecting the continued disruption by digital technology of the print media industry, newspaper ad spend is forecast to decline by 11.9% in 2017 and 8.9% in 2018. In 2017 and 2018, magazine ad spend is predicted to fall by 18.7% and 10.7%, respectively.
Commenting on the latest ad spend forecasts Simon Ryan, CEO of Dentsu Aegis Network ANZ, said:
“As ad spend in digital overtakes television, mobile overtakes desktop, and paid search overtakes print, it’s evident that we’re approaching a tipping point in both the industry and the consumer landscape.
“The challenge for brands is to best position themselves for growth by shifting the focus from audience-based to consumer-based marketing. Using data to better inform strategies, increase addressability and add value through innovation is key to this and will ensure brands remain relevant.
“Digital and data must now be the default settings for advertisers and evolving to people-based marketing using data to increase addressability. This will be essential for brands to manage future business conditions in 2017 while positioning themselves for future growth.
“At the same time, the challenge for brands is to ensure that they are ready to embrace the potential of the new economy and protecting brand which entails a mix of all media. Mitigating the cost of complexity and working with the right communications partners is crucial to ensure that brands remain relevant by creating new value for their consumers.”
The “Amazon effect”
Conditions are set to improve in 2018 with forecast growth in ad spend. The entry into the Australian market of Amazon in September 2017 is likely to fuel additional advertising activity across several sectors including Retail, Entertainment and Food. The “Amazon effect” will continue into 2018 when an overall advertising spend growth of 4.8% is forecast.
Growth in 2018 will also be boosted by key events including the Ashes cricket, Winter Olympics, along with State Elections in South Australia, Victoria, Queensland and Tasmania with a window of opportunity for a Federal election in August 2018 - May 2019 to contribute additional funds to advertising.
Figure 1: Growth in advertising expenditure 2016-2018 (selected economies)
|Year-on-year % growth at current prices|
|GLOBAL||4.8 (4.4)||3.8 (4.0)||4.3|
|NORTH AMERICA||5.0 (5.0)||3.6 (3.8)||4.0|
|USA||5.0 (5.0)||3.6 (3.8)||4.0|
|CANADA||3.1 (3.0)||3.1 (3.0)||2.7|
|W.EUROPE||4.0 (2.9)||3.5 (2.7)||3.6|
|UK||6.1 (5.4)||4.0 (4.6)||5.9|
|GERMANY||2.3 (2.3)||2.6 (2.1)||3.0|
|FRANCE||0.9 (0.9)||1.6 (1.2)||2.0|
|ITALY||3.5 (1.3)||0.8 (0.8)||1.5|
|SPAIN||6.8 (5.0)||5.0 (4.4)||3.6|
|C&EE||7.6 (4.7)||6.6 (5.5)||6.0|
|RUSSIA||11.4 (6.2)||9.8 (5.2)||7.8|
|ASIA-PACIFIC||4.7 (3.9)||4.3 (4.2)||4.6|
|AUSTRALIA||4.8 (5.4)||4.1 (4.5)||4.8|
|CHINA||7.4 (5.7)||6.0 (5.5)||5.4|
|INDIA||11.9 (12.0)||13.0 (13.9)||12.2|
|JAPAN||1.9 (1.8)||1.7 (1.2)||1.7|
|LATIN AMERICA||11.9 (10.0)||7.0 (9.8)||8.9|
|BRAZIL||5.4 (4.8)||2.1 (4.5)||5.0|
|Figures in brackets show our previous forecasts from September 2016|
 Conversion to AUD correct as at 16 June 2017.